Profitable Business

Accepting that a profitable business will succeed through its ability to convert the greatest possible number of customer enquiries into actual sales, we should spend some time understanding what is important to our customers, both current and potential. After all getting the customer to come to us is one thing, but getting them to spend their money with us, and making us their first choice garage are different matters altogether.

Meeting Customer Needs.

Service Quality can be described as what the customer expects to receive when doing business with you, based on word of mouth, their needs, past experience and your publicity.

Research of over 700 customers in four business sectors has shown that there are five key elements which contribute to the ‘Service Quality’ needs of the customer. These are described as:

Tangibles – The physical appearance of equipment, facilities, personnel and communication materials.

Reliability – The ability of your business to perform the promised service dependably and accurately.

Responsiveness – Your willingness to help customers and provide a prompt service.

Assurance – Possession of the required skills and knowledge to perform the service; politeness, respect and consideration of contact personnel; trustworthiness, believability and honesty; freedom from danger, risk or doubt.

Empathy – Approachability and ease of contact; keeping customers informed in a language they can understand and listening to them; individual attention to customers; making the effort to know individual customers and their specific needs.

Therefore, it is important to understand that while we may be able to attract customers to our business, our ability to deliver the above elements of our service offer is very important to them. If we fail to deliver their expectations, which are partly based on what we tell them we can offer, then we should expect not to retain the customer.

Some of the elements seem obvious, and you may believe that you perform well in them, but it is important to survey you customers and your business to ascertain where we are ‘vs.’ where we think we are, and implement corrective action if needed. Don’t forget to ask your customer how well they think you are delivering ‘Service Quality’.

“It ‘aint what you do it’s the way that you do it.”

We now know how to target the right sort of customer using some marketing techniques, we know how to concentrate on profitable work using customer analysis, so the next step is to review efficiency. Not the usual efficiencies of productive labour and parts first time pick etc, but specific business process efficiencies aimed at ethically maximising your revenues.

Don’t ‘short sell’ whilst estimating – Estimate don’t guesstimate. Utilise a reputable labour times reference guide such as the ICME manual. Modern vehicles are more complex then ever, so ensure that you quote for the all the time allowed for the repair in question. This will also provide consistency for customers and ensure that you are perceived as being fair.

Diagnostic charge – Labour guides are good for specific repair operation times, however, if the fault isn’t obvious and you need to perform pressure checks, fault codes and gas tests to be able to discover what the actual repair is, then it is a service, and you are entitled to charge for it.

Extras on the job – It is easy to forget about the small items that are used on a job such as degreaser, brake and carb cleaner, emery cloth, nuts, bolts, washers, grease and other lubricants; they are as much a cost of doing the job as the larger parts items. Also, environmental charges such as tyre disposal, oil waste and solvent disposal are all a cost of doing the job and should be factored in. You can either itemise specific items or add a small percentage to the invoice based on total job cost.

‘Up-selling’ to save the customer money in the longer term – Remember the possible extras involved in the job (belts, hoses, treatments etc.) at the time of estimating. It's always harder for customers to accept added cost as the job progresses rather than if these costs are presented ‘up front’ at estimating time. However, many owners, managers and technicians still hesitate to suggest legitimately needed items to customers that will, if they are done in conjunction with the present job, save them money. Don't be shy about it, some customers may say no, but many will accept your suggestions. If you hesitate to recommend the extra work that's needed you may lose some additional profit and worse still, customer confidence.

Keeps tools and equipment up-to date –It is not necessary to have all of the latest tools and equipment available to make yours a successful business, in fact, buying all the latest ‘toys’ that won’t earn their keep could be to the detriment of the business, but there are lots of advantages to having the right tools for the job. Making do with out of date equipment can seem frugal, but it is likely to cost you money through equipment breakdowns and inefficiencies of use. For example, an up to date scan tool will ensure that you can make a quick, accurate diagnosis, as opposed to an out of date fault code reader that could cost you both in wasted labour and unnecessary part purchases. An added benefit is that the purchase of new equipment can be offset against tax through lease payments and asset depreciation.

The training conundrum – I often hear managers say, “I can’t afford to train my staff and have them leave”, my response to this is “can you afford not to train your staff and have them stay – which in the long term, will be more costly?” Developing people through training is one way to maintain your competitive advantage, motivate and RETAIN your staff, although staff retention is a much larger issue than training alone.

Advances in technology mean that the pace of change of vehicle technology, business systems, computing and other supporting products is so fast that the only way to keep up is to undertake formal training programs. Your business should benefit in terms of increased productivity, expanded service offer and by more effectively meeting customer needs.

© James Dillon.  Date of article MMII.